Soccer woes, ad slowdown ding Q2 profits

An advertising slowdown, aggravated by missing out on the World Cup, cut second-quarter net profits at Silvio Berlusconi’s Mediaset by 18% to E187 million ($237 million), the company reported Tuesday.

Soccer turmoil, brought on by a match-fixing scandal, also could affect second-half revenues, the company said, as some advertisers and pay TV subscribers continue to sit out the start of the season.

For the first nine months of 2006, ad revenues are expected to fall by 1.4% year-on-year, said Luigi Colombo, managing director of PubItalia, adding that the goal of increasing second-half ad revenues by 1%-2% is now in doubt. Company’s ad revs for the first half fell 1.4% year-on-year to E1.58 billion.

Overall revenue at Europe’s second-largest media company fell 2.9% to $1.32 billion in the second quarter from $1.36 billion in the year-earlier period.

Mediaset, which is Italy’s largest private broadcaster, was hit hardest by the World Cup and national elections in the first half, the company said. State pubcaster RAI and satcaster Sky Italia won the broadcast rights to Italy’s victorious World Cup tournament, leaving Mediaset out of the single biggest viewing event of the year.

Colombo said the company lost $50.8 million in advertising revenue in April in the run-up to the election as advertisers shied away from the airwaves. “This explains why our trend has not been positive,” he said.

Mediaset TV channels lagged behind RAI in ratings through the first six months, notching a 40.6% audience share vs. RAI’s 44%. The company expects to close the ratings gap in the second half, Colombo said, primarily with a heavy lineup of fiction and dramas on its flagship channel, Canale 5; Rete 4 will carry primarily movies, he added.  

The company will air 485 professional soccer matches in the 2006-07 season, up considerably from 190 matches a year ago, which it expects will raise E120 million in revenues.

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